Corporate Close-Up: More States Providing for Electronic Filing for C Corporations, Passthrough Entities


An increasing number of states across the country are either allowing or requiring electronic filing for corporate entities.

Among them are California, Indiana, Pennsylvania and Virginia, which have enacted laws within the past few months that require the e-previous hitfilingnext hit of corporate and passthrough entity returns by professional return preparers. Massachusetts has refined its online system to make e-previous hitfilingnext hit easier and more streamlined.

Although third-party preparers are one segment of those required to file previous hitelectronicnext hit returns, the actions of these states and others suggest a trend toward requiring e-previous hitfilingnext hit for all taxpayers. 

Most states allow but don't necessarily require C corporations to file their returns electronically. While 36 states provide e-previous hitfilingnext hit options for C corporations, 20 of those states have e-previous hitfilingnext hit requirements of some kind. Eleven states don't allow C corporations to e-file. 

The number of states allowing or requiring previous hitelectronicnext hitprevious hitfilingnext hit is slightly lower for passthrough entities. Thirty-three states provide e-previous hitfilingnext hit options for passthrough entities, with 18 of those states imposing e-previous hitfilingnext hit requirements of some kind. Fourteen states don't allow passthrough entities to e-file.

For example, On Thursday, Dec. 11, the Indiana Department of Revenue announced that it will allow electronic filing for S corporations. Previously, the only option for S corporations was to file a paper return. 

The Department emphasized that its decision was driven by a desire for greater accuracy and security in its filing procedures. It noted in its Tax Talk Blog that the process would also likely be easier and faster for S corporations. These concerns as well as a desire for efficiency are likely part of the driving force behind this general movement of states toward electronic filing.

The Department added that it intends to expand their electronic filing program to other types of corporations in the future. For now, Indiana joins such states as Arkansas, Idaho and Missouri that allow electronic filing for pass through entities.

Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn: What is the likelihood of more states implementing e-filing for corporate entities and how will this affect the filing process?

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library today.

By Alex Dowd

Follow Alex on Twitter at: @ADowdSALT

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